Thousands of Spain's "indignant" protesters reoccupied Madrid's main square a day after riot police swooped down on demonstrators who rallied at the interior ministry to protest its closure.

Police stood by late Friday as the demonstrators entered the Puerta del Sol square, the symbol of their movement against the government's handling of Spain's economic crisis.

"This square belongs to the people. We have much to celebrate today. We won this battle," a spokesman for the movement said through a megaphone to applause and cheers.

The protesters set up a huge banner at the entrance to the square that read "Welcome Dignity" and sat on the ground to hold a "popular assembly" to discuss future protest action.

At least 20 people were injured when riot police late Thursday charged demonstrators who had gathered outside the ministry after trying unsuccessfully to gain access to Puerta del Sol square for the third straight day.

Seven of the injured were policemen. It was the most serious incident since the "indignant" movement began in mid-May in the square against Spain's economic crisis, soaring unemployment and political corruption.

Television images showed several protesters with blood on their faces being surrounded by police or being loaded into ambulances.

The protesters, many wearing orange stickers that read "Very Fragile", chanted "Shame! Shame! Shame!" as they passed the interior ministry, protected by more than 50 riot police who stood side by side outside the entrance.

Oriol, a 33-year-old whose arm was broken during the police charge on Thursday, tried to give a white carnation to the head of the riot police.

The policeman refused to accept the flower but shook hands with the protester after a brief chat.

"I asked them to be more respectful of the protesters. My goal was to show that it does not matter if they hit us, we are not afraid. I think this movement deserves the people's support," he told AFP, refusing to provide his last name.

"I had my back to the police and they struck me three times, once in my arm. The riot police hit everyone, women, old people."

The police say they were forced to intervene after some protesters tried to climb the ministry's fence to hang a sign. The demonstrators say there was no violence on their part.

Police cleared dozens of "indignant" protesters who were camped at an wooden information stand in the Puerta del Sol square in a dawn operation Tuesday that resulted in no injuries or arrests.

Since then members of the movement have staged daily demonstrations where they try to gain access to the square were blocked by rows of riot police.

Many of the protestors linked the police action to clear the square to Pope Benedict XVI's plans to visit Madrid between August 18-21 to attend the Roman Catholic Church's World Youth Day celebrations.

"This square does not belong to the pope," and "Less crucifixes and more jobs" were among the signs on display at the march in Madrid.

The "indignant" movement began when thousands of people set up camp in the Puerta del Sol square ahead of May 22 municipal elections to protest what they see as government's bowing to financial markets and ignoring the needs of ordinary people.

The vast ramshackle protest "˜village' was dismantled on June 12 but members of the nationwide 15-M movement, have since staged regular protests.